Interest Rates, Cash and The Federal Reserve Bank of Philadelphia
The informal research I've been doing for
has shown a consensus on maintaining a large
The question now is --
what makes the most sense in the timing?
The top three picks are listed below:
- maintain a large enough balance in a money market fund at the same institution
as my brokerage account. (This was
the eventual choice that I made... as their interest rate was within 1/4% of
the Treasuries, and it allowed me the ability to write checks.)
- bi-weekly acquisitions of small, short-term
notes (eg $1,000/13 week notes. This allows a turnover of notes and the
opportunity to take advantages of any
higher rates along the way.)
- accusation of larger, longer term notes/bills
(eg 5k/ 1year, 2year, and three year bills. This would allow us to lock-in
prior to a worst case scenario (ie falling interest rates) as well as,
offer more opportunity for capital gains.
(When interest rates fall, the price of the bill/note/bond will go up.)
To purchase Treasuries, I would go to the Federal Reserve Bank of Philadelphia
and open an account. There would be commissions or fees that way. Another
important point about Treasuries -- they pay the interest in a "discount" sort-of way.
(Which means you get paid your interest in advance.)
The Federal Reserve Bank of Philadelphia is located at
Ten Independence Mall, on the corner of 6th and Arch St.
The front entrance (on 6th St.) is open from 9 a.m. to 3 p.m. At other times, visitors
should enter from the employee entrance on 7th St.
The Federal Reserve Bank of Philadelphia's main telephone number is (215) 574-6000.
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